2023 (2) TMI 1345 - AT - Income Tax

Delayed payment of employees and employer s contribution towards the Provident Fund Account - Assessee as contended that the due date for payment was as per the Coal Mines Provident Fund Scheme, and the payments were made within the stipulated time - HELD THAT - We find that the ld. 1st Appellate Authority has blindly concurred with the AO without examining the details of actual payment. He just harped upon the audit report in which the factual error crept at the end of the auditor. Once a point is being raised by the assessee in an appeal with the help of relevant material demonstrating the factual error, the ld. CIT(Appeals) is bound to cross verify such facts and adjudicate the issue on merit. After going through the order of ld. CIT(Appeal), we are satisfied that ld. CIT(Appeals) failed to appreciate the controversy in true perspective inspite of bringing all relevant material facts. Taking into consideration the Rules of Coal Mines Provident Fund Scheme extracted supra and the actual payments made by the assessee within the due date, we are of the view that there is no lapse at the end of the assessee for claiming the deduction of this amount. Accordingly we allow the appeal of the assessee and delete the disallowance. Assessee appeal allowed.

Summary

Issues:
Disallowance of Provident Fund payments under section 36(1)(va) of the Income Tax Act.

Detailed Analysis:
The appellant contested the disallowance of Rs. 4,78,711 concerning Provident Fund payments made after the due date, as per the ld. Assessing Officer's order. The appellant argued that the due date for payment was as per the Coal Mines Provident Fund Scheme's Rule 33A, Sub-Rule (2), which states that payments should be made by the last day of the next month in which the contribution was received. The appellant submitted that the payments were made within the stipulated due dates, as per the scheme's provisions, and provided a detailed submission to support this claim. The Tax Auditor's error in mentioning incorrect due dates in the Tax Audit Report was highlighted as the reason for the disallowance.

The appellant, engaged in man-power supply, emphasized that compliance with labor laws, including Provident Fund contributions, was essential. The appellant deducted employees' contributions from their salaries and wages and argued that the Coal Mines Provident Fund Scheme's rules governed the due dates for contributions. The appellant requested no penal action, as the payments were made within the due dates specified in the scheme. The appellant's counsel referred to the scheme's provisions and argued that the disallowance was unjustified since the payments were made on time.

During the proceedings, the appellant's counsel cited Rule 33A of the Coal Mines Provident Fund Scheme, emphasizing that payments were made within the prescribed due dates. The counsel also referenced a Supreme Court decision to support the argument that no disallowance should be made for the amount in question. The Senior Departmental Representative contended that the appellant should have rectified the audit report and provided the necessary details.

Upon careful consideration of the contentions, the Tribunal found that the ld. CIT(Appeals) had blindly upheld the ld. Assessing Officer's decision without scrutinizing the actual payment details. The Tribunal noted that the ld. CIT(Appeals) failed to grasp the issue's essence despite the appellant presenting relevant material. After reviewing the Coal Mines Provident Fund Scheme's rules and the appellant's timely payments, the Tribunal concluded that the appellant had not erred in claiming the deduction. Consequently, the Tribunal allowed the appeal and annulled the disallowance of the amount in question.

In conclusion, the Tribunal ruled in favor of the appellant, emphasizing that the disallowance of Provident Fund payments was unwarranted as the payments were made within the due dates specified under the Coal Mines Provident Fund Scheme. The Tribunal highlighted the importance of verifying facts and adjudicating issues on merit, especially when relevant material is presented by the appellant.